The excitement and adrenalin from your latest gig has finally started to wear off. You wait patiently for your money to be deposited … and wait … and wait … and keep waiting. A few months pass and, in spite of a number of emails chasing your agent who is not responding, you still have not seen any improvements in your bank balance. Now you’re starting to feel a bit stressy because you really need this extra injection of cash to finance your next EP.
Artists and creatives can often find themselves relying on agents, managers or labels to handle the business and legal side of things and to pay musicians their entitlements for gigs, events and royalties within a reasonable period.
But if we’ve learned anything from Sixto Rodriguez, it’s that it is never wise to take anyone at face value where money is involved.
Luckily, the correct process involved in recovering a relatively small unpaid fee (under $10,000) in a way that does not inflame the situation or result in unnecessary litigation is a lot easier than it seems.
A straight-forward debt recovery process unfolds, in many ways, like a well-crafted playlist: equal parts listening, clear communication and structure. Then again, sometimes it requires turning up the intensity with a letter of demand.
Track 1: Shoegazing, Emailing
Just like the first song on a new playlist sets the mood and establishes expectations, the first track in securing an unpaid fee should be carefully considered before any action is taken. Begin with a slow-building shoegaze strategy that conveys a detached and non-confrontational message.
This can take the form of a quick email or phone call. Keep it brief, casual and indifferent. Importantly, make sure that you give the person who owes you money enough time to respond, for example, 2 weeks. Putting undue pressure on someone to fast track a payment is the quickest way to aggravate a relationship unnecessarily.
Track 2: Indie Pop, Reminder Time
If a few weeks pass and your first communication does not achieve the result or response you are looking for, move to track two with a follow-up email. Your next step should be to seek to build on the energy and momentum you created in track one. In spite of your feelings of frustration and disappointment, the idea is to send an angst-free tune to the inbox of the person who owes you money.
Get attention on your outstanding payment by getting in their head like an earworm – with sound repetition and friendly reminders.
Like a good indie-pop hook, your main refrain should be clear, unambiguous, non-abrasive and melodic.
A template you may wish to consider using:
Dear [insert agent’s name],
I hope this email finds you well.
I just wanted to follow up about payment for [insert name of event/gig/royalty] and to check whether there has been any progress. I would be grateful if you could please make the necessary arrangements for [insert relevant $$$ amount] to be deposited into my account as soon as possible as there has already been a considerable delay with your payment.
Thanks very much.
[insert your name]
Track 3: Punk Rock, Letter Of Demand
If you are still having no luck recovering payment after a number of weeks/months pass, even after sending several follow up letters and email reminders, then it is time to “turn it up to eleven” with track three by sending a letter of demand.
A letter of demand is a loud and unmistakable statement and often the final step before commencing legal action. It usually happens when you have made several unsuccessful attempts to have your invoice paid and sends a message that you are taking more serious action.
As a letter of demand shows a degree of formality and represents a serious step towards initiating legal action, it can inflame a dispute. Generally, however, it is a cost-effective and efficient way to recover unpaid fees without the need to go to court.
Your letter should include:
- the sum of money owed to you
- the service provided by you
- when payment was due
You may wish to include a warning that you will consider pursuing legal action if payment is not made by the specified date.
Attach any related documentation, such as the original payment agreement, dates of phone calls or previous emails requesting payment.
A template letter you may wish to consider using:
[Your name/business name, address and contact details]
[Agent/manager’s name and business address]
[Subject heading: Letter of demand for outstanding fee payment]
Dear [insert agent/manager’s name]
RE: OUTSTANDING PAYMENT
I am writing in relation to the outstanding fees totalling [insert total dollar amount, including GST]. This amount relates to the [insert name of event/gig/royalty for which you are owed money] when I performed on [insert date].
I refer to my invoice dated [day/month/year] that was due by [date payment was due] and remains outstanding.
Please find enclosed a dated copy of the invoice. I have also attached my previous requests for payment to be made:
- Letter dated [when first request was made]
- Letter dated [when second request was made]
I ask that you pay me the amount of [insert total dollar amount, plus a late payment interest as agreed in our contract dated (where a late payment interest clause is in your agreement)], by [insert date – generally allow 7 days].
Payment should be made to [insert your name including bank account details and your address].
If payment is not received within 7 days of receipt of this letter, I reserve the right to take legal action to recover the monies without further notice.
[insert your name]
It is important that the information and details included in the letter of demand are completely accurate to avoid someone saying that it is false or misleading.
O-riginal tip: Send the letter by registered post and request a ‘signed proof of delivery’ card. Retain a copy of the letter (as well as all other correspondence) for your own records and keep a copy of the proof of delivery card in case you need it as evidence in court. Often the letter of demand will be considered as evidence that you took reasonable steps to recover the funds.
While you can send a letter of demand yourself, it can be much more effective if the letter is sent from and includes a law firm’s letterhead. Most firms charge a set and inexpensive fee for a letter of demand. Make it clear in your instructions to a lawyer that you are only requesting a letter of demand and not legal advice, as this will avoid unnecessary expense.
Track 4: Heavy Metal
If the due date specified in your letter of demand lapses and you have not received payment, you may wish to move to track 4 by taking action in the Small Claims Court or equivalent in your State or Territory.
This is the heavy metal stage in the debt recovery playlist where the situation has escalated and unpleasant conflict is now inevitable. Like some metal bands, the court process can sound intense, discordant and uncomfortable. However, there is a clear and relatively straightforward process.
To bring a matter in the Small Claims Court in your State or Territory, you need to file an action. Where you commence an action will depend on the amount you are owed and in which State or Territory the debt arose.
The Small Claims Division of the NSW Local Court is for debts of $10,000 or less and has been set up with simplified procedures so that you do not need to have a lawyer.
How to start a claim in your local court (NSW):
- File a Statement of Claim form. This is available from the court by calling (02) 9287 7923 or downloading a form online.
- Include your name and address as the ‘Plaintiff’ and the details of the person who owes you money (the ‘Defendant’). Also include relevant details of the claim, for example, invoice numbers as well as when the debt became due. The Statement of Claim form has instructions on how to complete it. You can also make an appointment with the chamber magistrate at your nearest Local Court who can help you to fill out and lodge your statement of claim. More instructions on completing forms can be found here.
- File four copies of the completed Statement of Claim with the NSW Local Court or online registry and pay the filing fee (approximately $97). The Court retains the original.
- Serve a sealed copy of the Statement of Claim on the person who owes you money. There are rules that must be followed on how to properly serve a document. You or the person who serves the document should complete an Affidavit of Service.
Throughout the process of recovering an unpaid fee, the number one rule is to remain calm and respectful. It can be a tiresome and frustrating task trying to recover money, however, any unprofessionalism on your part could result in bad blood and potentially destroy the possibility of ongoing business relationships.
Template and sample letters of demand:
Filling out a statement of claim instructions.
How to file an action in your State or Territory:
Commence your claim in either in the Victorian Civil and Administrative Tribunal (depending on the nature of the dispute) or the Magistrates Court. The Victorian Magistrates Court does not have a small claims division but has jurisdiction to hear claims up to $100,000.
The Small Claims Division of the Local Court deals with claims up to $10,000. If you are owed more than $10,000 but less than $100,000, your matter will be in the General Division of the Local Court.
- Western Austalia
Commence your claim in the Magistrates Court if you are owed less than $10,000. If you are owed between $10,000 and $75,000, you can commence a general procedure case in the Magistrates Court.
- South Australia
The Small Claims Division of the Magistrates Court deals with claims up to $6,000. If you are owed more than $6,000 but less than $100,000, the Magistrates Court hears the claim in its General Division.
Commence your claim in the Queensland Civil and Administrative Tribunal if you are owed up to $25,000. If the amount is more than $25,000 but less than $150,000, it will be heard by the Magistrates Court.
Commence your claim as a Minor Civil Claim of the Civil Court of the Magistrates Court if you are owed $5,000 or less. To recover amounts from $5,001 to $50,000 you need to file a Civil claim. The Magistrates Court hears claims up to the value of $50,000 or above if both parties agree.
- Northern Territory
If you are making a small claim for up to $25,000 you can apply to have your matter heard through the Northern Territory Civil and Administrative Tribunal. To recover an amount between $25,001 and $250,000 you can apply to have it heard in the Local Court. If your claim is above $250,000 it will be heard by the Supreme Court.
- Australian Capital Territory
Commence your claim with the ACT Civil and Administrative Tribunal (ACAT) if the amount is up to $25,000. Claims up to $250,000 must be brought in the Magistrates Court unless both parties agree to use ACAT.